A/HRC/36/40 “IFC took insufficient measures to identify activities where Ficohsa was exposed to environment and social risk through its existing portfolio. This is of particular concern given background E&S risk that emerges from the regulatory and governance context in which Ficohsa was operating.” 6. CAO further noted that IFC had failed to conduct an adequate review of Ficohsa’s social and environmental management system, or its capacity to implement IFC’s environmental and social requirements. “As a result, IFC acquired an equity stake in a commercial bank with significant exposure to high risk sectors and clients, but which lacked capacity to implement IFC’s environmental and social requirements …This included additional exposure to Dinant, a company which IFC knew to be affected by a violent land conflict.” 7. In relation to the decision to disburse, CAO found that IFC’s review of the applicable conditions of disbursement did not comply with the requirement that E&S staff clear any E&S conditions following a review of evidence of compliance: “CAO finds that IFC cleared disbursement against its investment agreements, without assuring itself that Ficohsa had submitted the environmental and social information that was required.” 8. In relation to project supervision CAO found that: “IFC had not assured itself in an adequate or timely manner that Ficohsa was operating as envisaged at the time of appraisal or that Ficohsa was applying the Performance Standards to its sub-projects”. 9. In relation to Dinant, CAO found that: “highly relevant information on the conflict and related D&S risks surrounding Dinant, that was held by members of IFC’s Dinant investment team, was not shared with key members of its Ficohsa team, even though there were staff working across both teams … By waiving a key financial covenant and then taking an equity position in Ficohsa, however, IFC: (a) increased its exposure, and (b) facilitated a significant ongoing flow of capital to Dinant, outside the framework of its environmental and social standards; and thus at a time when IFC management was aware of serious unmitigated environmental and social risks regarding its agribusiness client.” 10. This remarkable investigation also sought to explain the underlying causes of the numerous instances of non-compliance. CAO observed: “a primacy of financial considerations in IFC’s decision making”. CAO also noted “a siloing of information with the result that relevant information was not shared among key members of IFC’s Ficohsa team.” 46